Market Verdict on Iron Ore：
· Iron ore short-run neutral.
Macro
· U.S. May CPI up 5% y-o-y, created the biggest single month increase during the past 13 years. Because the economy boost stimulate the travel services and second-hand automobile price. The strong data partially due to the soft economic data base in last year during pandemic spread. One official from Biden government said the CPI potentially reached top level in this May, and believed the price increase would not lasting during the next half of the year.
· PBOC: China may social financing increased 1.92 trillion yuan, down 1.27 trillion yuan from the year 2020, up 208.1 billion yuan compared with the year 2019. China May M2 up 8.3%, est. 8.1%, last 8.1%.
Iron Ore Key Indicators:
· Platts62 $217.00, +3.50, MTD $210.23. MB65-P62 spread had narrowed from $36 at end May to $29.87 yesterday, indicating the structure shortage on Brazil high grade are gradually resolved. Some mills indicated that they will start to look for JMBF due to the cost efficiency. Lump premium spiked to $0.7035 dmtu, almost doubled from the beginning of the year. The big increase was related to a harsh production restriction in June and July.
· MySteel 45 ports iron ore inventories at 123.67 million tonnes, down 1.675 million tonnes w-o-w. Daily evacuation 2.9829 million tonnes, up 38,300 tonnes w-o-w. Australia iron ore 63.18 million tonnes, down 2.0195 million tonnes w-o-w. Brazil iron ore 36.798 million tonnes, up 12,800 tonnes w-o-w. 142 ships at ports, up 12.
SGX Iron Ore 62% Futures& Options Open Interest (Jun 10th)
Futures 79,103,200 tonnes(Increase 204,800 tonnes)
Options 78,224,800 tonnes(Increase 747,500 tonnes)
Steel Key Indicators
· MySteel researched 18 EAFs average construction steel production cost 4820 yuan/tonne, up 54 yuan/tonne w-o-w.
· Mysteel researched 247 blast furnace operation rate at 80.34 down 0.52% w-o-w. Utilisation rate 91.69%, down 0.2% w-o-w. Daily pig iron production 2.44 million tonnes, up 5,300 tonnes.
